Weekly Trading Guide

SBI surged over 4 per cent during intra-week, but lost momentum towards the end of the week. It reversed sharply lower from the high of ₹301.95, giving back most of the gains and closed marginally higher for the week. A near-term support is in the ₹285-₹284 region. Whether the stock sustains above this support zone or not will determine the direction of the next move. If SBI reverses higher from this support, the bullish outlook will remain intact. In such a scenario, there is a strong likelihood of the stock breaking above the resistance at ₹301. The ensuing targets above ₹301 are ₹310 and ₹312. A further break above ₹312 will pave way for ₹322. On the other hand, if SBI breaks below ₹284, it can fall to ₹282 or ₹280. A break below ₹280 will increase the likelihood of the fall extending to ₹276. Traders who have taken long positions on a break above ₹294 last week can hold it, but should remain cautious. Retain the stop-loss at ₹282 for the target of ₹318. Revise the stop-loss higher to ₹301 as soon as SBI moves up to ₹307.

ITC (₹276.5)

ITC has come-off sharply from its high of ₹284.25 in the past week. The 55-week moving average resistance at ₹284 has halted the recent upmove in the stock has triggered this reversal. This leaves the near-term outlook mixed for the stock. A key support is near current levels at ₹274. If ITC declines below this support, it can come under pressure. In such a scenario, a fall to ₹270 is possible. A break below ₹270 will then increase the likelihood of the fall extending towards ₹266 or ₹265. The region between ₹266 and ₹265 is a significant short-term support. A bounce from this support zone can trigger a relief rally to ₹275. But a break below ₹265 can drag ITC lower to ₹260. On the other hand, if the stock manages to reverse higher from ₹274 in the coming days, an upmove to ₹280 and ₹283 is possible. A further break above ₹283 can then target ₹287 and ₹290. A strong break above ₹290 is needed to turn the outlook bullish. Such a break can will increase the likelihood of the stock targeting ₹300 and ₹310.

Infosys (₹645.7)

Infosys snapped its three-week rally recently. The stock plummeted over 8 per cent last week, triggering the stop-loss on the long positions recommended. The sharp fall has turned the short-term outlook to negative for the stock. Key resistances are poised at ₹662, ₹667, ₹670 and then in the ₹680-₹685 region. This resistance cluster is likely to cap the upside in the near term. Though an intermediate bounce cannot be ruled out, a strong break above ₹685 looks unlikely. A fall to ₹625 is possible in the coming days. A break below ₹625 will then increase the likelihood of the fall extending to ₹600. The region between ₹600 and ₹590 is a crucial medium-term support. The price action around this support zone will need a close watch to get a cue on the subsequent move. Traders can make use of the bounce and go short at ₹660 and ₹670. Stop-loss can be placed at ₹695 for the target of ₹605. Revise the stop-loss lower to ₹645 as soon as the stock moves down to ₹637. The outlook for the stock will turn positive only if it records a decisive weekly close above ₹700.

RIL (₹1,098.3)

RIL seems to be lacking fresh and strong follow-through buyers. The stock inched higher in the initial part of last week but reversed sharply lower, giving back all the gains after hitting a high of ₹1,146.55. RIL declined 1.2 per cent last week. The near-term outlook is negative. A fall to ₹1,060 or ₹1,050 is likely in the coming days. A break below ₹1,050 will then increase the possibility of the fall extending towards ₹1,030 – the 55-day moving average and ₹1,010. On the other hand, if RIL manages to bounce from the ₹1,060-₹1,050 support zone, an upmove to ₹1,100 is possible. A break above ₹1,100 will then increase the likelihood of the stock extending its upmove to ₹1,150 and ₹1,160 — the 21-week moving average resistance. Broadly, RIL is likely to oscillate in a wide sideways range between ₹1,000 and ₹1,200 for some time. A decisive breakout on either side of ₹1,000 or ₹1,200 will then determine the direction of the subsequent move. Traders can stay out of the market until the range breakout gives a clear cue on the next trend.

Tata Steel (₹520.1)

The upmove in Tata Steel seems to be lacking strength. The stock made a high of ₹532 and reversed lower to close at ₹520.1, up 1.3 per cent for the week. The price action last week indicates that the stock is facing resistance and getting strong sellers around ₹533. The short-term outlook will turn positive only if the stock breaks ₹533 decisively. Such a break can take the stock higher to ₹560 or ₹570. But the bias is negative on the chart, which leaves the possibility high of the stock falling back to ₹500 levels again. A strong break below ₹500 will then increase the likelihood of the stock extending its downmove to ₹480. A further break below ₹480 can drag Tata Steel lower to ₹460. As mentioned last week, the level of ₹460 is a crucial long-term trend support, which may have the potential to halt the downtrend in the stock that has been in place since the beginning of this year. As such, the price action around ₹460 will need a close watch to get a cue on the next move.

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